House Sends Majority of Tax Package to Senate in Week Two
Legislators pulled long hours at the Capitol as the 2024 Third Extraordinary Session continued last week. House members began debating elements of Governor Landry’s tax proposal on the floor early in the week and by Thursday, 11/14, had sent the majority of the Governor’s tax plan to the Senate, where Revenue & Fiscal Affairs began hearing testimony on Sunday.
Read on for a recap of week two and a look ahead at week three.
Louisiana Forward
Governor Jeff Landry’s tax reform proposal, Louisiana Forward, proposes a full-scale restructure of Louisiana’s tax code, to include revisions to Article VII of the State Constitution.
Hallmarks of Louisiana Forward, as outlined by the Louisiana Department of Revenue (LDR), include:
- Eliminating uncompetitive taxes, such as the franchise and inventory taxes
- Broadening tax bases by eliminating preferences and reducing rates
- Simplifying the tax code with fewer carve-outs and flat income tax rates
- Giving the legislature greater spending flexibility by removing dedications and unlocking funds
- Accelerating debt payments to free up recurring general fund revenue
More details on the plan are available on the LDR’s tax reform dashboard here.
Bulk of Tax Plan Advances to Senate
House Ways and Means and House Appropriations met for multiple hearings last week to continue considering measures included in the Governor’s tax plan. After the tax bills cleared committee earlier in the week, the full House met for long hours and advanced most of the bills to the Senate, where Revenue and Fiscal Affairs began meeting Sunday afternoon.
Below are status updates on key measures that progressed in week two:
HB 1 by Rep. Emerson (Personal Income Tax) – Provides for a flat rate of 3.0% for purposes of calculating income tax for individuals, estates, and trusts, increases the standard deduction, and modifies or repeals certain income tax deductions and credits
HB 1 passed the House by a vote of 87-12 on 11/12. Senate Revenue and Fiscal Affairs heard testimony on HB 1 on 11/17 and the committee is expected to vote on the bill on 11/18.
HB 2 by Rep. Emerson (Corporate Income Tax) – Provides for a flat rate, of 5.5% for the 2025 tax year, and 3.5% for tax years thereafter, for purposes of calculating corporate income tax and terminates certain corporate income tax exemptions, deductions, and credits
HB 2 passed the House by a vote of 79-19 on 11/13. Senate Revenue and Fiscal Affairs heard testimony on HB 2 on 11/17 and the committee is expected to vote on the bill on 11/18.
HB 3 by Rep. Emerson (Corporate Franchise Tax) – Repeals the corporation franchise tax and limits eligibility of certain credits to be claimed against the corporation franchise tax
HB 3 passed the House by a vote of 83-14 on 11/12. Senate Revenue and Fiscal Affairs heard testimony on HB 3 on 11/17 and the committee is expected to vote on the bill on 11/18.
HB 6 by Rep. Beaullieu (Elections) – Calls a special statewide election on March 29, 2025, for submitting proposed constitutional amendments to the state’s electors
HB 6 was reported favorably by House and Governmental Affairs and House Appropriations on 11/13 before passing the House unanimously on 11/14, and is now pending Senate and Governmental Affairs.
HB 7 by Rep. Emerson (Constitutional Amendment) – Revises Article VII of the Louisiana Constitution
HB 7 was reported favorably by House Civil Law and Procedure on 11/11, then passed the House by a vote of 81-15 on 11/12. Senate Revenue and Fiscal Affairs heard testimony on HB 7 on 11/17 and the committee is expected to vote on the bill on 11/18.
HB 8 by Rep. Brass (Sales and Use Tax) – Levies sales and use taxes on certain digital products and services
HB 8 was reported favorably by House Ways and Means on 11/11 before passing the House by a vote of 80-19 on 11/13. Senate Revenue and Fiscal Affairs heard testimony on HB 8 on 11/17 and the committee is expected to vote on the bill on 11/18.
HB 9 by Rep. Riser (Sales and Use Tax) – Provides for sales and use tax on certain services
HB 9 was reported favorably by both House Ways and Means and House Appropriations on 11/13. The bill was scheduled to be considered in the full House last Thursday, 11/14, but was returned to the calendar and could be reconsidered this week.
HB 10 by Rep. Wright (Sales and Use Tax) – Provides for the rate of the state sales and use tax and provides for the exemptions, exclusions, credits, and rebates claimed against sales and use taxes
HB 10 was reported favorably by House Ways and Means, where the bill was amended to renew .40 of the .45 temporary sales tax set to expire in 2025, and House Appropriations on 11/13. The bill then passed the House by a vote of 71-23 on 11/14. Senate Revenue and Fiscal Affairs heard testimony on HB 10 on 11/17 and the committee is expected to vote on the bill on 11/18.
HB 11 by Rep. Deshotel (Ad Valorem Tax) – Provides for the homestead exemption, special assessment level, and other property tax exemptions for purposes of determining ad valorem taxation of certain property; includes a mechanism providing parishes the option to eliminate the inventory tax through a one-time incentive payment from the state
HB 11 was reported favorably by House Ways and Means on 11/10, passed the House by a vote of 79-17 on 11/12, and is currently pending Senate Revenue and Fiscal Affairs.
HB 25 by Rep. Riser (Severance Tax) – Provides relative to severance tax on oil and gas and for dedication of certain severance tax revenues
HB 25 was reported favorably by both House Ways and Means and House Appropriations on 11/13 before passing the House unanimously on 11/14. Senate Revenue and Fiscal Affairs heard testimony on HB 25 on 11/17 and is expected to vote on the bill on 11/18.
Teacher Pay
As part of the tax plan, the state would pay down approximately $2 billion in debt accrued through the Teachers Retirement System of Louisiana (TRSL) by eliminating certain funds contained within the state constitution. HB 5 by Rep. Bacala would require local school systems to use the savings realized from reducing TRSL debt to provide permanent, $2,000 teacher pay raises and $1,000 school support staff raises. House legislators amended HB 5 to specify that funds left over after providing teacher pay raises can be put toward early childhood education.
HB 5 cleared the House unanimously on 11/14 and now heads to Senate Education.
LOOKING AHEAD
Most eyes will be trained on the Senate this week as committees in the upper chamber continue hearing elements of the Governor’s tax package. Any measures that are amended by the Senate will have to return to the House for concurrence prior to being sent to the Governor’s desk. Legislators have until next Monday, November 25 to handle business before adjournment.
Be on the lookout for 1A legislative updates throughout the special session.
